Debt consolidation combines multiple debts into a single account. It can help you save money, lower your monthly payments, and streamline your payoff process. While you can consolidate debt in multiple ways, debt consolidation loans and balance transfers are the most common. 

Here’s what you should know about each one so you can determine the ideal debt consolidation strategy for your unique situation. 

If you need a loan to consolidate high-interest debt, Credible makes it easy to see your prequalified personal loan rates from various lenders, all in one place.

Both debt consolidation loans and balance transfer credit cards are credit products you can use to consolidate other higher interest debts. Here’s a closer look at how each one works. 

A debt consolidation loan is a type of unsecured personal loan. If you take one out, you’ll receive a lump sum of money up front. Then, you’ll repay what you borrow through fixed monthly payments over a set period of time. While loan amounts vary, they can range from $1,000 to $100,000. 

If you have various types of debt that might take several years to pay off, a debt consolidation loan is worth considering. 

Balance transfer credit cards allow you to transfer balances from your current cards to a new card, typically with a 0% APR introductory period that may be anywhere from six to 18 months. If you pay off all your debt before this introductory period comes to an end, you can save a lot on interest. But keep in mind that once the period ends, you’ll start accruing interest on the card’s remaining balance, and credit cards can have high interest rates. 

If you have a lot of high-interest credit card debt and you can pay it off during the introductory period, a balance transfer credit card may make sense. 

Before you choose a debt consolidation loan, consider these benefits and drawbacks:

Visit Credible to compare personal loan rates from various lenders, without affecting your credit score.

Here are some advantages and disadvantages to think about before you decide on a balance transfer:

As you compare a debt consolidation loan and balance transfer, consider these factors: 

You can get a debt consolidation loan at a bank, credit union, or online lender. While banks and credit unions tend to offer competitive rates, they usually have stricter requirements than online lenders. Also, you must join a credit union before taking out a loan from one. 

If your credit score is preventing you from getting approved for a debt consolidation loan, you may want to apply with a cosigner who has good credit or take the time to improve your credit before you apply. 

If you’re ready to apply for a debt consolidation loan, Credible lets you quickly and easily compare personal loan rates to find one that suits your needs.

Many banks and credit card companies offer balance transfer credit cards. If you’re having trouble qualifying for one, check your credit reports and dispute any errors. Also focus on making your payments on time and do your best to pay down some of your credit card debt to improve your credit utilization.